Tips for organizing your finances before divorce
If you are going through, or about to go through a divorce, you likely know that money plays a big role in the “uncoupling”. How long you were married likely will impact how much your financial lives have become entangled. Now comes the hard part: Untying those knots while still having peace of mind
Joint bank and credit cardsYou should consider, and discuss with an attorney, whether to close joint bank and credit cards. There are good reasons for doing so. There's nothing worse than finding that your ex has either withdrawn money from a joint bank account or racked up credit card charges. Many people don't know it, but if their name is on the account, regardless of who made the charges, they will be held financially responsible. At the same time, you do not want to shut the other party out of finances and access to cash and credit needed to pay bills, so all decisions about closing joint accounts should be reviewed by your lawyer or, if no lawyers are involved, discussed with your spouse. Because you don't want to be left up the creek with out a credit card, you might want to apply for new ones pronto. This will give you a way to pay the bills should you find yourself short on cash. You also will need to open a new bank account. Do it sooner rather than later in case you run into credit issues..
Your personal credit reportCheck your credit score on a regular basis to make sure you are in good standing. During this time you may have to find a place to stay or purchase other big-ticket items and you don't want to find out from a landlord or salesperson that your credit is questionable.
Financial safety netMake sure you have a financial safety net. If possible, put aside several months worth of money to pay for your everyday living expenses. The financial pucture is about to change for one or both of you. There may be moving, apartment or home rental, furniture buying, etc. Having some extra cash will help with these items. It will also help avoid a situation where your spouse, if he/she is the breadwinner, stops paying your bills or cuts off your access to funds. This will give you a safety net of a couple of months, which may be needed to get a court date to address the issue.
Budgeting and planningYou are likely going to be living in a new financial world, and that calls for a new budget. Take a look at how much you are going to need to live on your own, i.e. daily living expenses, as well as what kind of money you will need as you head into retirement. Many people find themselves in a deficit, and then a financial panic. Money may be tight during and after the divorce- this happens to most people. But that does not mean it will be that way forever. Planning and budgeting will go a long way to help change the short term picture.